Dealers hope VW deal brings owners back on board

Volkswagen's 652 U.S. dealers have been in limbo for eight months, prohibited from selling the 2.0 liter diesel engine vehicles.

Editor's note: An earlier version of this story had incorrect sales figures for Volkswagen and the overall U.S. market.

SAN FRANCISCO -- Volkswagen dealers in the United States said they were cautiously optimistic consumers will be drawn back into the fold by the German automaker's plans to buy back or fix owners' polluting diesel vehicles.

"You only get one shot with doing this and doing it right," said Lewisville, Texas dealer Alan Brown. "The dealer network is going to want to celebrate that the customer is made happy. That will be the first step in rehabilitating (the brand) in our customers' eyes."

The deal announced in a San Francisco federal courtroom on Thursday calls for VW to buy back 482,000 2.0-liter vehicles, fix them if regulators agree, or cancel outstanding leases.

Volkswagen did not disclose details Thursday of how much owners of diesel models would be compensated or what a fix would entail. Buy-back offers related to recalls are unusual in the auto industry, but they can benefit dealers if structured as incentives for consumers to buy or lease a new model.

The diesel scandal hit VW's U.S. dealers at a time when the automaker's product portfolio was already suffering in a highly competitive market. Some key VW models were not available in the United States and the company lacked a full complement of sport utility vehicles at a time when cheaper gasoline was luring consumers back into larger rides, dealers said.

"It's not just the situation with the diesels," said Gus Staino, a New Jersey dealer. "The bigger problem is that we have old product and the products with the technology in it that the customers want are hard to get."

Volkswagen's 652 U.S. dealers have been in limbo for eight months, prohibited from selling the 2.0 liter diesel engine vehicles. VW has admitted these engines were programmed with software designed to defeat government emissions tests. Regulators said tests found that the cars could emit up to 40 times the U.S. legal limit of smog-forming pollutants.

"We dealt with a lot of customers who were upset and felt their trust was broken," said John Shauvin, a Georgetown, Texas dealer. "All we could do is put our arms around them and say 'Hey, we're in the same boat as you. We didn't know this was coming.'"

Volkswagen tried to pacify angry customers and frustrated dealers in November by offering a $1,000 credit, half of which had to be spent at VW and Audi dealerships. But U.S. dealers have long complained that centralized control out of Germany meant cars in VW lots did not correspond to U.S. tastes.

Total Volkswagen Group of America sales -- comprising the VW, Audi, Porsche and low-volume Bentley and Lamborghini brands -- are down 5.7 percent through the first three months of this year, while overall U.S. auto sales are up 3.3 percent.

AutoNation Inc., the largest U.S. auto dealership chain, sold two Dallas area VW dealerships recently, said Marc Cannon, the company's chief marketing officer.

One dealer said most owners of VW diesels like them and would choose to fix their cars, rather than sell them back.

"Once the cars get fixed, their resale value will rebound dramatically. I think the resale value will be one of the smaller issues," said Los Angeles dealer Mike Sullivan. "Most people don't want to get rid of the car, most want to keep it."